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Weekly report / Arizona State Retirement System Board (ASRS)

Weekly report

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For the Period ending Friday, May 10, 2002.
Please forward this or make it available to your employees
This Weeks News:
On Tuesday, May 7, the State Senate confirmed the nomination of James D. Bruner for reappointment
to the ASRS Board.
Thursday, May 9, the Senate concurred in the House amendments to SB 1095 (ASRS; federal
conforming changes with RTW), and passed the bill on a 27-0 vote. It has been sent to the Governor.
HB 2558 (retirees; health insurance; enhanced subsidy) passed Senate COW on Wednesday, May 8,
and awaits 3rd Reading in the Senate.
The House passed the package of budget bills for the 2003 budget year. There is no mention of any
early retirement window. The major contention on the package revolves around the elimination of the
State Board of Community Colleges and cuts in Public Safety/Corrections.
The budget package included the following:
HB 2706 (general appropriations ; fiscal year 2002-2003) passed the House on a 33-24.
HB 2707 (capital outlay; appropriations; 2002-2003) passed the House on a 34-23.
HB 2708 (omnibus budget reconciliation; public finances) passed the House on a 33-24 vote.
HB 2709 (health; budget reconciliation; 2002-2003) passed the House on a 35-22 vote.
HB 2710 (education; omnibus budget reconciliation; 2002-2003) passed the House on a 32-
25 vote.
HB 2711 (appropriations; biotechnology) passed the House on a 45-12 vote.
HB 2712 (IRC conformity; revenue sharing) passed the House on a 46-10 vote.
The bills now go to the Senate for action.
Next Week:
The Senate returns to the Floor at 10 a.m., Monday, May 13; the House returns at 1 p.m. Today is the
last day for conference committees unless the Speaker and President provide an extension of time on
Monday.
Speaker Weiers is reported to be hopeful that the Legislature can adjourn by Friday, May 17.
WEEKLY REPORT
ARIZONA STATE RETIREMENT SYSTEM
LeRoy Gilbertson, Director
3300 North Central Avenue, Phoenix, Arizona 85012
ASRS Board
Mr. Jim Bruner
Chairman
Mr. Norman Miller
Vice-Chairman
Ms. Charlotte Borcher
Dr. Chuck Essigs
Ms. Bonnie Gonzalez
Mr. Alan Maguire
Mr. Karl Polen
Mr. Ray Rottas
Mr. N. Carl Tenney
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Changes are noted by: bold, italics, underscored
This Sessions Bills:
SENATE BILLS
SB 1004 (ASRS; spousal consent)
By Sens. Smith and Cirillo
As Passed the Senate: Requires a married ASRS member to take a joint and survivor option (the
default) unless the members spouse consents to the member choosing an alternative option. A 50%
joint and survivor option is the default option if the married member fails to make a choice. An
unmarried member is automatically eligible for the straight life option unless they choose otherwise.
Provides that the ASRS and its Board are not liable for payment or payments not made in reliance on
the consent or waiver of a members spouse or the affirmations of a member made in applications to
the ASRS.
Appropriates $125,558 from the ASRS administration account to implement the act, and it authorizes
1.5 FTEs. Effective July 1, 2003.
Amended in Hse. RGO to allow retires who have elected a life certain option to pop up.
Status: Passed Sen. Third Read 03/28/02, 28-0-2. Assigned Hse. RGO. Passed Hse.
RGO 04/09/02, DPA 7-0-0-3. Assigned Hse. APPROP 04/17/02. Withdrawn from
Hse. APPROP 04/29/02. Passed Hse. Rules 04/30/02, C&P 11-0. Passed Hse.
Caucus 04/30/02. Hse. RGO Amendment adopted. Failed Hse. COW 05/01/02,
DPA 9-45-6.
Admin Costs: As Passed the Senate: $125,558 for printing new forms, computer programming
costs and 1.5 new FTEs.
Actuarial Costs: As Passed the Senate: None expected
Hse. RGO Amendment: Unfunded liability of $32.1 million, an increase in the
contribution rate for all employers and employees of 0.03% each, which is a
combined cost of $469,000 more in annual contributions for 17 years.
SB 1095 (ASRS; federal conforming changes)
By Sen. Cirillo
As Passed the Senate: Repeals the scheduled June 30, 2003, Sunset of the Return to Work
Program. The Return to Work Program allows all ASRS retired members who have achieved normal
retirement to return to work one year after terminating employment. The member continues to receive
all retirement benefits, but does not make any retirement or LTD contributions to the ASRS. The
member receives a salary they negotiate with the ASRS employer, but the member does not accrue
any additional benefits in the ASRS, nor is the member eligible for LTD benefits.
Additionally, SB 1095 conforms state law to changes in federal law resulting from the passage of the
Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTERRA). The law:
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Increases the annual benefit limit for defined benefit plans to $160,000.
Increases the annual contribution limits under 415(c) to the lesser of 100% of compensation
or $40,000, indexed in $1,000 increments.
Increases the amount of compensation that may be taken into account under qualified
retirement plans to $200,000, indexed in $5,000 increments.
Repeals coordination requirements for 457 plans, so that 457 contributions are not limited by
401(k)/403(b) contributions.
After December 31, 2001, permits funds from IRAs, 403(b) and 457 plans to be transferred
on a pre-tax basis to purchase permissive service credit, or to repay prior cash outs, in
governmental defined benefit plans.
Appropriates $270,342 from the ASRS administration account to implement the act, and it authorizes 5
FTEs.
Status: Passed Sen. Third Read 03/28/02, 28-0-2. Passed Hse. Third Read 05/02/02, 57-
0-3. Transmitted to the Senate 05/02/02. Senate Concur 05/07/02. Passed
Senate Final Read 05/09/02, 27-0-3. Transmitted to Governor Hull 05/09/02.
Admin Costs: As Passed the Senate: $270,342 to include 5 FTEs.
Actuarial Costs: As Passed the Senate: Actuarial letter has been received stating no cost.
SB 1120 (ASRS; retirees; graded multiplier increase)
By Sens. Hamilton and Gerard
As Passed the Senate: Provides members or their beneficiaries who were receiving benefits on May
8, 2001, under the ASRS defined benefit program, a one-time permanent benefit increase based on
years of service, from 2.38% to 9.52%, matching the graded multiplier passed in the 2001 session.
Amended in Hse. RGO to appropriate $255,000 to the ASRS for the implementation of this act.
Status: Passed Sen. Third Read 03/28/02, 17-11-2. Assigned Hse. RGO and Hse.
APPROP. Passed Hse. RGO 04/09/02, DPA 8-0-0-2. DEAD()
Admin Costs: As Passed the Senate: $255,428 for mailing, equipment and professional outside
services.
Actuarial Costs: As Passed the Senate: Unfunded liability of $328.5 million, an increase in the
contribution rate for all employers and employees of 0.26% each, which is a
combined cost of $33 million more in annual contributions for 17 years.
SB 1239 (retirees; health insurance; enhanced subsidy)
By Sen. Arzberger and 7 co-sponsors
As Passed the Senate: Extends the enhanced health insurance premium benefit to ASRS retirees
and LTD recipients who live outside of Arizona. Clarifies the definition of non service areas.
Retroactively effective to June 30, 2001.
Amended in Hse. RGO to be the same as HB 2558, including extending the program from 2003 to
2004.
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Status: Passed Sen. Third Read 04/01/02, 27-0-3. Assigned Hse. RGO and Hse.
APPROP. Passed Hse. RGO 04/09/02, DPA 7-0-0-3. Scheduled Hse. APPROP
04/16/02. Passed Hse. APPROP 04/16/02, DP 8-2-0-6. Not yet heard in Hse.
Rules.
Admin Costs: As Passed the Senate: $370,000.
Actuarial Costs: As Passed the Senate: Unfunded liability of $1.58 million, an increase in
contribution rate for all employers and employees of 0.0013% each which is a
combined cost of $160,848 more in annual contributions for 17 years.
As Amended in Hse. RGO: Unfunded liability of $11.6 million, an increase in
contribution rate for all employers and employees of 0.0113% each which is a
combined cost of $1.16 million more in annual contributions for 17 years.
SB 1241 (retirees; health insurance; subsidies)
By Sen. Arzberger and 11 co-sponsors
Extends the enhanced health insurance premium benefit to ASRS retirees and LTD recipients who live
outside of Arizona, clarifies the definition of non service areas, and makes technical changes. This
bill is retroactively effective to June 30, 2001.
Status: Assigned to Sen. FIN. DEAD ()
Admin Costs: $370,260.
Actuarial Costs: Unfunded liability of $1.58 million, an increase in contribution rate for all employers
and employees of 0.0013% each which is a combined cost of $160,848 more in
annual contributions for 17 years.
SB 1328 (transportation peace officers; retirement)
By Sen. Mitchell and 19 co-sponsors
Transfers Department of Transportation certified peace officers from the ASRS to PSPRS.
Status: Assigned to Sen. FIN. DEAD ()
Admin Costs: None expected.
Actuarial Costs: None expected.
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HOUSE BILLS
HB 2211 (ASRS; retirees; graded multiplier increase)
By Reps. Brimhall and Graf
Amended in Hse. RGO to provide that members or their beneficiaries who were receiving benefits on
May 8, 2001, under the ASRS defined benefit program, a one-time permanent benefit increase based
on years of service from 2.38% to 9.52%, matching the graded multiplier passed in the 2001 session.
As introduced, this bill is identical to SB 1120. As amended, this bill is identical to HB 2379.
Status: Assigned to Hse. RGO and Hse. APPROPS. Passed Hse. RGO 03/22/02, DPA 6-
0-0-4. DEAD ()
Admin Costs: $255,428 for mailing, equipment and professional outside services.
Actuarial Costs: Unfunded liability of $328.5 million, an increase in the contribution rate for all
employers and employees of 0.26% each which is a combined cost of $33 million
more in annual contributions for 17 years.
HB 2215 (ASRS; actuarial computation method)
By Reps. Brimhall and Graf
Changes the method of valuing the ASRS assets from the Projected Unit Credit (PUC) method to the
Entry Age Normal (EAN) method beginning June 30, 2003. Amended in Hse. RGO to provide that
commencing July 1, 2007, employer contributions are to be determined by EAN. HB 2215 also
changes the valuation period from 30 years to 20 years. Note: The Governor vetoed a similar bill last
session.
Status: Assigned to Hse. RGO and Hse. APPROPS. Passed Hse. RGO 03/19/02, DPA 6-
1-2-1. DEAD ()
Admin Costs: None expected.
Actuarial Costs: Unfunded liability of $228 million in 2011, an increase in contribution rate for all
employers and employees ranges from 2.08% to 5.94%.
HB 2219 (ASRS; retirement window; teachers)
By Reps. Brimhall and Graf
Provides an early retirement window for Tier 1 (educational) employees who retire between June 30
and September 1, 2002. Allows employees to add six years of age to reach normal retirement age or
early retirement at 77 points, and add three years of credited service for the purpose of calculating their
retirement benefit.
Status: Assigned to Hse. Education, Hse. RGO, Hse. APPROPS. DEAD ()
Admin Costs: First year cost of $3.6 million and $529,000 per year thereafter.
Actuarial Costs: Unfunded liability of $2.18 billion which reduces the Fund to only 96.5% funded, an
increase in contribution rate for all employers and employees of 2.83% each which
is a combined cost of $209.9 more in annual contributions for 17 years.
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HB 2225 (ASRS; conforming changes; federal law)
By Reps. Brimhall and Graf
(STRIKE EVERYTHING AMENDMENT SUBJECT: abortion; fetal pain)
Conforms state law to the recent changes in federal law passed in the EGTERRA. It provides:
Increases the annual benefit limit for defined benefit plans to $160,000.
Increases the annual contribution limits under 415(c) to the lesser of 100% of compensation
or $40,000, indexed in $1,000 increments.
Increases the amount of compensation that may be taken into account under qualified
retirement plans to $200,000, indexed in $5,000 increments.
Repeals coordination requirements for 457 plans, so that 457 contributions are not limited by
401(k)/403(b) contributions.
After December 31, 2001, permits funds from IRAs, 403(b) and 457 plans to be transferred
on a pre-tax basis to purchase permissive service credit, or to repay prior cash outs in
governmental defined benefit plans.
Status: Assigned to Hse. RGO. Hse. RGO 03/22/02, S/E FAILED 4-4-0-2. DEAD ()
Admin Costs: $270,342 to include 5 FTEs. An amendment for the administrative costs has been
requested.
Actuarial Costs: Actuarial letter has been received stating no cost.
HB 2226 (ASRS; separate account; teachers)
By Reps. Brimhall and Graf
(STRIKE EVERYTHING AMENDMENT SUBJECT: credit reports; consumer copy)
Divides the ASRS employers into two groups. Tier 1 employers are each state university, each school
district, each charter school, each community college district and the AZ School for the Deaf and Blind.
Tier 2 employers are the state and all political subdivisions that are not included in the Tier 1 definition.
HB 2226 requires the ASRS to account Tier 1 employers separately, and provide them with an
actuarially determined contribution rate. Employees are allowed to transfer between employers.
Status: Assigned to Hse. RGO. Hse. RGO 3/19/02, S/E FAILED 5-4-0-1. DEAD ()
Admin Costs: First year cost of $4.1 million and $964,000 per year thereafter including 14 new FTEs.
Actuarial Costs: An increase in the contribution rate for all employers and employees in the Tier 2
group of 0.40%, a decrease in contribution rate for all employers and employees in
the Tier 1 group of 0.14%. Rate changes assume 0% return on investments for the
current year.
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HB 2354 (deferred retirement option plans)
By Reps. Voss, Brotherton, and Sen. Richardson
Establishes a second voluntary DROP program for ASRS, EORP and CORP members that would start
July 1, 2003, and extend through July 1, 2008. Generally, this DROP would allow an ASRS member,
who has attained normal retirement age, to opt to extend employment up to five years, but not accrue
additional benefits in the defined benefit plan. Instead the members pension would be paid into a
separate account and invested. At the end of the period chosen by the employee, the benefit from the
separate account would be paid in a lump sum or as an annuity.
Status: Assigned to Hse. RGO and Hse. APPROPS. Passed Hse. RGO 2/05/02, DPA 8-
1-1-0. DEAD ()
Admin Costs: $793,846.
Actuarial Costs: Unfunded liability of $135.2 million, an increase in contribution rate for all
employers and employees of 0.28%.
HB 2379 (ASRS; retirees; graded multiplier increase)
By Rep. McClure
Amended in Hse. RGO to provide that members or their beneficiaries who were receiving benefits on
May 8, 2001, under the ASRS defined benefit program, a one-time permanent benefit increase based
on years of service from 2.38% to 9.52%, matching the graded multiplier passed in the 2001 session.
As amended, this bill is identical to HB 2211. As introduced this bill is identical to SB 1120.
Status: Assigned to Hse. RGO and Hse. APPROPS. Passed Hse. RGO 3/19/02, DPA 9-
0-0-1. DEAD ()
Admin Costs: $255,428 for mailing, equipment and professional outside services.
Actuarial Costs: Unfunded liability of $328.5 million, an increase in the contribution rate for all
employers and employees of 0.26% each which is a combined cost of $33 million
more in annual contributions for 17 years.
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HB 2558 (retirees; health insurance; enhanced subsidy)
By Rep. Carruthers and 7 co-sponsors
As Passed the House: Extends the enhanced health insurance premium benefit for rural (nonservice)
areas from June 30, 2003 to June 30, 2004. Clarifies that the enhanced health insurance
premium benefit is in addition to the permanent health insurance premium benefit, applies the
incremental health insurance premium benefit percentage increase based on years of service between
5 to 10 years to the enhanced health insurance premium benefit, and clarifies the definition of nonservice
area.
Status: Passed Hse. Third Read 04/08/02, 49-0-11. Transmitted to the Senate 4/10/02.
Assigned Sen. FIN. Discharged Sen. FIN 04/18/02. Discharged Sen. Rules
04/18/02. Passed Sen. Caucus 05/06/02. Passed Sen. COW 05/08/02, DP.
Admin Costs: As Passed the House: $370,000.
Actuarial Costs: As Passed the House: Unfunded liability of $11.6 million, an increase in the
contribution rate for all employers and employees of 0.0113% each which is a
combined cost of $1.16 million more in annual contributions for 17 years.
TIER 2 (BILL NOT YET FILED)
This proposal may be introduced in an omnibus budget reconciliation bill. It would provide three years
of age to bring a state or local government employee to a normal retirement age or early retirement
under the point system (77 points), and add three years of credited service to the account of qualified
employees for the purpose of calculating the employees retirement benefit. The window would be
open from July 1, 2002 though September 30, 2002. This proposal is subject to change.
Status: Not yet introduced. The original supporters of this proposal appear to support it no
longer due to the high cost. ISSUE may be DEAD for this session.
Admin Costs:
Actuarial Costs: Unfunded liability of $654.2 million, an increase in the contribution rate for all
employers and employees of 1.76% each which is a combined cost of $1.18
billion.
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OTHER SYSTEM BILLS
(Summaries as Introduced)
HB 2023 (PSPRS; deferred retirement date) DEAD ()
By Reps. Carpenter and OHalleran
A technical amendment to provide that a PSPRS member entering the DROP stops accruing benefits in the
PSPRS the day after he or she enters the DROP.
HB 2024 (fire fighters' pension; technical correction) DEAD ()
By Reps. Carpenter and OHalleran
A technical amendment to Title 9 to ensure that distribution of insurance premium taxes that are designated for
fire districts go to fire districts.
HB 2081 (PSPRS; prior service; redemption)Signed by Governor Hull 04/09/02, Ch. 13.
By Reps. Cannell, Carruthers, and Sen. Guenther and 2 co-sponsors
Allows PSPRS members to redeem prior service with an employer member of PSPRS by paying the amount of
the employer and employee contributions plus interest and any additional actuarial costs as determined by the
PSPRS actuary.
HB 2118 (PSPRS; CORP; EORP; retirement benefits)
By Rep. Blendu and 17 co-sponsors
Increases survivor benefits for the PSPRS, CORP, and the EORP. Makes the PSPRS DROP permanent and
modifies disability requirements within DROP and applies a 2% tax equity benefit for PSPRS and EORP
members.
HB 2288 (Retirement; PSPRS disability) DEAD ()
By Rep. Carruthers
The multiplier governing disability payments under the PSPRS is revised, apparently to increase payments.
HB 2372 (Retirement; PSPRS)
By Rep. Marsh
Allows PSPRS members to purchase credited service in the PSPRS based prior public service for which they
are not receiving a benefit. The member must pay the amount of employer and employee contributions plus
interest on the previous public service, if any, and an actuarial amount calculated by the PSPRS actuary for the
cost of the service to be purchased.
HB 2373 (county employee insurance; payment)Signed by Governor Hull 05/06/02, Ch. 143.
By Reps. Marsh and Avelar and 3 co-sponsors
Allows public funds to be expended to pay all or any part of the insurance premiums for former county
employees who are retired and receiving income from a retirement program of the State of Arizona and their
dependents.
HCR 2022 (Judge Retirement Age) (DEAD)
By Rep. Camarot
The 2002 general election ballot is to carry the question of amending the state constitution to raise the
mandatory judicial retirement age from 70 to 75.
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LEGEND
AMEND C&P Constitutional and Proper as Amended by the House Rules Committee
ASRS Arizona State Retirement System
C&P Constitutional and Proper
CORP Corrections Officer Retirement Plan
COW Committee of the Whole
DP Do Pass
DPA Do Pass as Amended
DROP Deferred Retirement Option Plan
EAN Entry Age Normal
EORP Elected Officials Retirement Plan
FIN Finance Committee
FII Financial Institutions and Insurance Committee
IRS Internal Revenue Service
LTD Long Term Disability
PBI Permanent Benefit Increase
PIRA Public Institutions and Rural Affairs Committee
PFC Proper for Consideration
PFCA Proper for Consideration as Amended by the Senate Rules Committee
PUC Projected Unit Credit
PSPRS Public Safety Personnel Retirement System
RGO Retirement and Government Operations Committee
S/E Strike Everything Amendment
W&M Ways and Means Committee
The ASRS External Operations Division and the Legislative Board Committee usually meets each
Friday during the legislative session. The meetings are held in the 14th floor conference room of the
ASRS office located at 3300 North Central Avenue, Phoenix, AZ., and are open to the public. The
purpose of these meetings is to review legislative activity on retirement bills from the previous week,
and to review the scheduled bill activity in committees and on the floor for the upcoming week.
Committee members ask technical and background questions, and reviews the latest information
gathered from the Capitol and retirement groups from around the state. The meeting is
teleconferenced to the ASRS Tucson office located at 7660 East Broadway Boulevard, Tucson, AZ.
Please call any of the numbers below for time and details of Friday Legislative Board Committee
meetings.
If you have questions relating to legislation, please call Tom Finnerty at
(602) 240-2027 in metro Phoenix, (520) 239-3100 extension 2027 in
metro Tucson, or (800) 621-3778 extension 2027 outside metro Phoenix
and Tucson.
The weekly legislative report is available on-line at the ASRS Web site:
www.asrs.state.az.us
Quick Reference
ASRS Related Retirement Legislation
(For the Period Ending Friday, May 10, 2002)
BILLS BILL STATUS ASRS ADMIN. COST ACTUARIAL COST
SENATE BILLS
SB 1004 ASRS; spousal consent
by Smith & Cirillo
As Passed the Senate: Requires a married ASRS member to
take a joint and survivor option unless the members spouse
consents to the member choosing a different option. The 50%
joint and survivor option is the default option if the married
member fails to make a choice. The straight life option is the
default option for an unmarried member unless they choose
otherwise. Appropriates $125,558 from the ASRS admin.
account, and authorizes 1.5 FTEs. Effective July 1, 2003.
Amended in Hse. RGO to allow retirees who have elected a
life certain option to pop up.
Passed Senate 28-0-2.
Assigned: Hse. RGO.
Status: Passed Hse.
RGO DPA 7-0-0-3.
Assigned Hse. APPROP
04/18/02. Withdrawn
from Hse. APPROP.
Passed Hse. Rules C&P
11-0. Passed Hse.
Caucus. Hse. RGO
Amendment adopted.
Failed Hse. COW DPA
9-45-6.
As Passed the Senate:
$125,558 for printing
new forms, computer
programming costs and
1.5 new FTEs.
As Passed the Senate: None expected.
Hse. RGO Amendment: Unfunded
liability of $32.1 million, an increase in
the contribution rate for all employers
and employees of 0.03% each, which is
a combined cost of $469,000 more in
annual contributions for 17 years.
SB 1095 ASRS; federal conforming changes
by Cirillo
As Passed the Senate: Conforms the ASRS statutes to recent
changes in federal laws and repeals the sunset of the return to
work program. Appropriates $270,342 from the ASRS admin.
account, and authorizes 5 FTEs.
Passed Senate 28-0-2.
Passed House 57-0-3.
Status: Transmitted to
the Senate 05/02/02.
Senate Concur. Passed
Sen. Final Read 27-0-3.
Transmitted to the
Governor.
As Passed the Senate:
$270,342 to include 5
FTEs.
As Passed the Senate: Actuarial letter
has been received stating no cost.
SB 1120 - ASRS; retirees; graded multiplier increase
by Hamilton & Gerard
As Passed the Senate: Provides a one-time benefit increase
that is based on years of service, to members retired on or
before May 8, 2001.
Amended in Hse. RGO to appropriate $255,000 to the ASRS
for the implementation of this act.
Passed Senate 17-11-2.
Assigned: Hse. RGO.
Hse. APPROP.
Status: Passed Hse.
RGO DPA 8-0-0-2.
Awaiting Hse. APPROP.
DEAD()
As Passed the Senate:
$255,428 for mailing,
equipment and
professional outside
services.
As Passed the Senate: Unfunded
liability of $328.5 million, an increase in
the contribution rate for all employers
and employees of 0.26% each which is a
combined cost of $33 million more in
annual contributions for 17 years.
SB 1239 retirees; health insurance; enhanced
subsidy
by Arzberger, Rios, Brown & Guenther and 4
As Passed the Senate: Extends the enhanced health
insurance premium benefit to ASRS retirees and LTD recipients
who live outside of Arizona. Clarifies the definition of non
service areas. Retroactively effective to June 30, 2001.
Amended in Hse. RGO to be the same as HB 2558, including
extending the program from 2003 to 2004.
Passed Senate 27-0-3.
Assigned: Hse. RGO.
Hse. APPROP.
Status: Passed Hse.
RGO DPA 7-0-0-3.
Passed Hse. APPROP
DP 8-2-0-6. Awaiting
Hse. Rules.
As Passed the Senate:
$370,000.
As Passed the Senate: Unfunded
liability of $1.58 million, a hypothetical
increase in contribution rate for all
employers and employees of 0.0013%
each which is a combined cost of
$160,848 more in annual contributions
for 17 years.
As Amended in Hse. RGO: Unfunded
liability for $11.6 million, an increase in
contribution rate for all employers and
13
BILLS BILL STATUS ASRS ADMIN. COST ACTUARIAL COST
SENATE BILLS
employees for 0.0113% each which is a
combined cost of $1.16 million more in
annual contributions for 17 years.
SB 1241 retirees; health insurance; subsidies
by Arzberger, Guenther & Verkamp and 9
Allows the subsidy to be paid to members with 10 or more
years of service, clarifies the definition on non-service area,
clarifies the subsidy is in addition to the regular amount, and
allows members residing in a different state to receive the
subsidy.
Assigned: Sen. FIN.
Status: Awaiting Sen.
FIN. DEAD ()
$370,260. Unfunded liability of $1.58 million, a
hypothetical increase in contribution rate
for all employers and employees of
0.0013% each which is a combined cost
of $160,848 more in annual contributions
for 17 years.
SB 1328 transportation peace officers; retirement
by Mitchell and 19
Allows ADOT peace officers to contribute to PSPRS.
Assigned: Sen. FIN
Status: Awaiting Sen.
FIN. DEAD ()
None expected. None expected.
14
BILLS BILL STATUS ASRS ADMIN. COST ACTUARIAL COST
HOUSE BILLS
HB 2211 ASRS; retirees; graded multiplier increase
by Brimhall & Graf
Amended in Committee to provide members or their
beneficiaries who were receiving benefits on May 8, 2001, a
one-time benefit increase that is based on years of service.
Assigned: Hse. RGO.
Hse. APPROP.
Status: Passed Hse.
RGO DPA 6-0-0-4.
Awaiting Hse.
APPROP. DEAD ()
$255,428 for mailing,
equipment and
professional outside
services.
Unfunded liability of $328.5 million, an
increase in the contribution rate for all
employers and employees of 0.26%
each which is a combined cost of $33
million more in annual contributions for
17 years.
HB 2215 ASRS; actuarial computation method
Changes the actuarial computation method from EAN to PUC.
Reduces the amortization period from 30 years to 20 years.
by Brimhall & Graf
Amended in Committee to provide that commencing July 1,
2007, employer contributions are to be determined by EAN.
Assigned: Hse. RGO.
Hse. APPROP.
Status: Passed Hse.
RGO DPA 6-1-2-1.
Awaiting Hse.
APPROP. DEAD ()
None expected. Gradually reduces the surplus over a
ten-year period resulting in less than
100% funded by 2011. Gradually
increases the contribution rate for
employers and employees, attaining a
total increase of 2.08% each by
7/1/2011.
Note: The actuary estimates that the
fund could maintain a fully funded status
(100.4% funded) if the transition period
was shortened to seven years.
HB 2219 ASRS; retirement window; teachers
Provides an early retirement window for Tier 1 employees
between June 30 and September 1, 2002. May add 6 years to
age, and 3 years to service to attain normal retirement.
Conditionally enacted upon passage of HB2226.
by Brimhall & Graf
Assigned: Hse. ED.
Hse. RGO. Hse.
APPROP.
Status: Awaiting Hse.
ED. DEAD ()
First year cost of $3.6
million and $529,000 per
year thereafter.
Unfunded liability of $2.18 billion which
reduces the Fund to only 96.5% funded,
an increase in contribution rate for all
employers and employees of 2.83%
each which is a combined cost of $209.9
more in annual contributions for 17
years.
HB 2225 ASRS; conforming changes; federal law
Conforms the ASRS statutes to recent changes in federal laws.
by Brimhall & Graf
(S/E AMENDMENT: abortion; fetal pain)
Assigned: Hse. RGO.
Status: S/E Failed Hse.
RGO 4-4-0-2.
DEAD ()
$270,342 to include 5
FTEs. An amendment
for the administrative
costs has been
requested.
Actuarial letter has been received stating
no cost.
HB 2226 ASRS; separate account; teachers
Divides the ASRS employers into two groups. Requires the
ASRS to account Tier 1 employers separately, and provide them
with an actuarially determined contribution rate. Allows
employees to transfer between employers.
by Brimhall & Graf
(S/E AMENDMENT: credit reports; consumer copy)
Assigned: Hse. RGO.
Status: S/E Failed Hse.
RGO 5-4-0-1. DEAD
()
First year cost of $4.1
million and $964,000 per
year thereafter including
14 new FTEs.
An increase in the contribution rate for all
employers and employees in the Tier 2
group of 0.25% each, a decrease in
contribution rate for all employers and
employees in the Tier 1 group of 0.17%
each.
HB 2354 deferred retirement option plans
Establishes a voluntary DROP for active members between July
1, 2003 and June 30, 2008.
by Voss & Brotherton, Richardson
Assigned: Hse. RGO.
Hse. APPROP.
Status: Hse. RGO DPA
8-1-0-1. Awaiting Hse.
APPROP.
$793,846. Unfunded liability of $135.2 million, an
increase in the contribution rate for all
employers and employees of 0.28%.
15
BILLS BILL STATUS ASRS ADMIN. COST ACTUARIAL COST
HOUSE BILLS
DEAD ()
HB 2379 ASRS; Retirees; graded multiplier
increase, aka HB 2211 as amended, SB 1120 as
introduced
Amended in Committee to provide that members or their
beneficiaries who were receiving benefits on May 8, 2001, a
one-time benefit increase that is based on years of service.
by McClure & Binder and 11
Assigned: Hse. RGO.
Hse. APPROP.
Status: Passed Hse.
RGO DPA 9-0-0-1.
Awaiting Hse.
APPROP. DEAD ()
$255,428 for mailing,
equipment and
professional outside
services.
Unfunded liability of $328.5 million, an
increase in the contribution rate for all
employers and employees of 0.26%
each which is a combined cost of $33
million more in annual contributions for
17 years.
HB 2558 retirees; health insurance; enhanced
subsidy
by Carruthers and 7
As Passed the House: Extends the rural health insurance
subsidy passed in 2001, until June 30, 2004. Clarifies that the
enhanced health insurance premium benefit is in addition to the
permanent health insurance premium benefit, applies the
incremental health insurance premium benefit percentage
increase based on years of service between 5 to 10 years to the
enhanced health insurance premium benefit, and clarifies the
definition of non-service area.
Passed House 49-0-11.
Assigned: Sen. FIN.
Status: Discharged
Sen. FIN. Discharged
Sen. Rules. Passed
Sen. Caucus. Passed
Sen. COW DP.
As Passed the House:
$370,000.
As Passed the House: Unfunded
liability of $11.6 million, an increase in
the contribution rate for all employers
and employees of 0.0113% each which
is a combined cost of $1.16 million more
in annual contributions for 17 years.
TIER 2 ASRS; retirement window; local government
and state employees. NO BILL YET FILED.
Proposal to create an early retirement window for all
employees in Tier 2 of HB 2226 and subtract salary
amounts of retiring state employees from the state
agencys budget.
The original supporters
of this proposal appear
to no longer support it
due to the high cost.
ISSUE may be DEAD
for this session.
Unfunded liability of $654.2 million, an
increase in the contribution rate for all
employers and employees of 1.76%
each which is a combined cost of $1.18
billion over 17 years.

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Arizona State Library, Archives and Public Records--Law and Research Library.

Full Text

- 2 -
For the Period ending Friday, May 10, 2002.
Please forward this or make it available to your employees
This Weeks News:
On Tuesday, May 7, the State Senate confirmed the nomination of James D. Bruner for reappointment
to the ASRS Board.
Thursday, May 9, the Senate concurred in the House amendments to SB 1095 (ASRS; federal
conforming changes with RTW), and passed the bill on a 27-0 vote. It has been sent to the Governor.
HB 2558 (retirees; health insurance; enhanced subsidy) passed Senate COW on Wednesday, May 8,
and awaits 3rd Reading in the Senate.
The House passed the package of budget bills for the 2003 budget year. There is no mention of any
early retirement window. The major contention on the package revolves around the elimination of the
State Board of Community Colleges and cuts in Public Safety/Corrections.
The budget package included the following:
HB 2706 (general appropriations ; fiscal year 2002-2003) passed the House on a 33-24.
HB 2707 (capital outlay; appropriations; 2002-2003) passed the House on a 34-23.
HB 2708 (omnibus budget reconciliation; public finances) passed the House on a 33-24 vote.
HB 2709 (health; budget reconciliation; 2002-2003) passed the House on a 35-22 vote.
HB 2710 (education; omnibus budget reconciliation; 2002-2003) passed the House on a 32-
25 vote.
HB 2711 (appropriations; biotechnology) passed the House on a 45-12 vote.
HB 2712 (IRC conformity; revenue sharing) passed the House on a 46-10 vote.
The bills now go to the Senate for action.
Next Week:
The Senate returns to the Floor at 10 a.m., Monday, May 13; the House returns at 1 p.m. Today is the
last day for conference committees unless the Speaker and President provide an extension of time on
Monday.
Speaker Weiers is reported to be hopeful that the Legislature can adjourn by Friday, May 17.
WEEKLY REPORT
ARIZONA STATE RETIREMENT SYSTEM
LeRoy Gilbertson, Director
3300 North Central Avenue, Phoenix, Arizona 85012
ASRS Board
Mr. Jim Bruner
Chairman
Mr. Norman Miller
Vice-Chairman
Ms. Charlotte Borcher
Dr. Chuck Essigs
Ms. Bonnie Gonzalez
Mr. Alan Maguire
Mr. Karl Polen
Mr. Ray Rottas
Mr. N. Carl Tenney
- 3 -
Changes are noted by: bold, italics, underscored
This Sessions Bills:
SENATE BILLS
SB 1004 (ASRS; spousal consent)
By Sens. Smith and Cirillo
As Passed the Senate: Requires a married ASRS member to take a joint and survivor option (the
default) unless the members spouse consents to the member choosing an alternative option. A 50%
joint and survivor option is the default option if the married member fails to make a choice. An
unmarried member is automatically eligible for the straight life option unless they choose otherwise.
Provides that the ASRS and its Board are not liable for payment or payments not made in reliance on
the consent or waiver of a members spouse or the affirmations of a member made in applications to
the ASRS.
Appropriates $125,558 from the ASRS administration account to implement the act, and it authorizes
1.5 FTEs. Effective July 1, 2003.
Amended in Hse. RGO to allow retires who have elected a life certain option to pop up.
Status: Passed Sen. Third Read 03/28/02, 28-0-2. Assigned Hse. RGO. Passed Hse.
RGO 04/09/02, DPA 7-0-0-3. Assigned Hse. APPROP 04/17/02. Withdrawn from
Hse. APPROP 04/29/02. Passed Hse. Rules 04/30/02, C&P 11-0. Passed Hse.
Caucus 04/30/02. Hse. RGO Amendment adopted. Failed Hse. COW 05/01/02,
DPA 9-45-6.
Admin Costs: As Passed the Senate: $125,558 for printing new forms, computer programming
costs and 1.5 new FTEs.
Actuarial Costs: As Passed the Senate: None expected
Hse. RGO Amendment: Unfunded liability of $32.1 million, an increase in the
contribution rate for all employers and employees of 0.03% each, which is a
combined cost of $469,000 more in annual contributions for 17 years.
SB 1095 (ASRS; federal conforming changes)
By Sen. Cirillo
As Passed the Senate: Repeals the scheduled June 30, 2003, Sunset of the Return to Work
Program. The Return to Work Program allows all ASRS retired members who have achieved normal
retirement to return to work one year after terminating employment. The member continues to receive
all retirement benefits, but does not make any retirement or LTD contributions to the ASRS. The
member receives a salary they negotiate with the ASRS employer, but the member does not accrue
any additional benefits in the ASRS, nor is the member eligible for LTD benefits.
Additionally, SB 1095 conforms state law to changes in federal law resulting from the passage of the
Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTERRA). The law:
- 4 -
Increases the annual benefit limit for defined benefit plans to $160,000.
Increases the annual contribution limits under 415(c) to the lesser of 100% of compensation
or $40,000, indexed in $1,000 increments.
Increases the amount of compensation that may be taken into account under qualified
retirement plans to $200,000, indexed in $5,000 increments.
Repeals coordination requirements for 457 plans, so that 457 contributions are not limited by
401(k)/403(b) contributions.
After December 31, 2001, permits funds from IRAs, 403(b) and 457 plans to be transferred
on a pre-tax basis to purchase permissive service credit, or to repay prior cash outs, in
governmental defined benefit plans.
Appropriates $270,342 from the ASRS administration account to implement the act, and it authorizes 5
FTEs.
Status: Passed Sen. Third Read 03/28/02, 28-0-2. Passed Hse. Third Read 05/02/02, 57-
0-3. Transmitted to the Senate 05/02/02. Senate Concur 05/07/02. Passed
Senate Final Read 05/09/02, 27-0-3. Transmitted to Governor Hull 05/09/02.
Admin Costs: As Passed the Senate: $270,342 to include 5 FTEs.
Actuarial Costs: As Passed the Senate: Actuarial letter has been received stating no cost.
SB 1120 (ASRS; retirees; graded multiplier increase)
By Sens. Hamilton and Gerard
As Passed the Senate: Provides members or their beneficiaries who were receiving benefits on May
8, 2001, under the ASRS defined benefit program, a one-time permanent benefit increase based on
years of service, from 2.38% to 9.52%, matching the graded multiplier passed in the 2001 session.
Amended in Hse. RGO to appropriate $255,000 to the ASRS for the implementation of this act.
Status: Passed Sen. Third Read 03/28/02, 17-11-2. Assigned Hse. RGO and Hse.
APPROP. Passed Hse. RGO 04/09/02, DPA 8-0-0-2. DEAD()
Admin Costs: As Passed the Senate: $255,428 for mailing, equipment and professional outside
services.
Actuarial Costs: As Passed the Senate: Unfunded liability of $328.5 million, an increase in the
contribution rate for all employers and employees of 0.26% each, which is a
combined cost of $33 million more in annual contributions for 17 years.
SB 1239 (retirees; health insurance; enhanced subsidy)
By Sen. Arzberger and 7 co-sponsors
As Passed the Senate: Extends the enhanced health insurance premium benefit to ASRS retirees
and LTD recipients who live outside of Arizona. Clarifies the definition of non service areas.
Retroactively effective to June 30, 2001.
Amended in Hse. RGO to be the same as HB 2558, including extending the program from 2003 to
2004.
- 5 -
Status: Passed Sen. Third Read 04/01/02, 27-0-3. Assigned Hse. RGO and Hse.
APPROP. Passed Hse. RGO 04/09/02, DPA 7-0-0-3. Scheduled Hse. APPROP
04/16/02. Passed Hse. APPROP 04/16/02, DP 8-2-0-6. Not yet heard in Hse.
Rules.
Admin Costs: As Passed the Senate: $370,000.
Actuarial Costs: As Passed the Senate: Unfunded liability of $1.58 million, an increase in
contribution rate for all employers and employees of 0.0013% each which is a
combined cost of $160,848 more in annual contributions for 17 years.
As Amended in Hse. RGO: Unfunded liability of $11.6 million, an increase in
contribution rate for all employers and employees of 0.0113% each which is a
combined cost of $1.16 million more in annual contributions for 17 years.
SB 1241 (retirees; health insurance; subsidies)
By Sen. Arzberger and 11 co-sponsors
Extends the enhanced health insurance premium benefit to ASRS retirees and LTD recipients who live
outside of Arizona, clarifies the definition of non service areas, and makes technical changes. This
bill is retroactively effective to June 30, 2001.
Status: Assigned to Sen. FIN. DEAD ()
Admin Costs: $370,260.
Actuarial Costs: Unfunded liability of $1.58 million, an increase in contribution rate for all employers
and employees of 0.0013% each which is a combined cost of $160,848 more in
annual contributions for 17 years.
SB 1328 (transportation peace officers; retirement)
By Sen. Mitchell and 19 co-sponsors
Transfers Department of Transportation certified peace officers from the ASRS to PSPRS.
Status: Assigned to Sen. FIN. DEAD ()
Admin Costs: None expected.
Actuarial Costs: None expected.
- 6 -
HOUSE BILLS
HB 2211 (ASRS; retirees; graded multiplier increase)
By Reps. Brimhall and Graf
Amended in Hse. RGO to provide that members or their beneficiaries who were receiving benefits on
May 8, 2001, under the ASRS defined benefit program, a one-time permanent benefit increase based
on years of service from 2.38% to 9.52%, matching the graded multiplier passed in the 2001 session.
As introduced, this bill is identical to SB 1120. As amended, this bill is identical to HB 2379.
Status: Assigned to Hse. RGO and Hse. APPROPS. Passed Hse. RGO 03/22/02, DPA 6-
0-0-4. DEAD ()
Admin Costs: $255,428 for mailing, equipment and professional outside services.
Actuarial Costs: Unfunded liability of $328.5 million, an increase in the contribution rate for all
employers and employees of 0.26% each which is a combined cost of $33 million
more in annual contributions for 17 years.
HB 2215 (ASRS; actuarial computation method)
By Reps. Brimhall and Graf
Changes the method of valuing the ASRS assets from the Projected Unit Credit (PUC) method to the
Entry Age Normal (EAN) method beginning June 30, 2003. Amended in Hse. RGO to provide that
commencing July 1, 2007, employer contributions are to be determined by EAN. HB 2215 also
changes the valuation period from 30 years to 20 years. Note: The Governor vetoed a similar bill last
session.
Status: Assigned to Hse. RGO and Hse. APPROPS. Passed Hse. RGO 03/19/02, DPA 6-
1-2-1. DEAD ()
Admin Costs: None expected.
Actuarial Costs: Unfunded liability of $228 million in 2011, an increase in contribution rate for all
employers and employees ranges from 2.08% to 5.94%.
HB 2219 (ASRS; retirement window; teachers)
By Reps. Brimhall and Graf
Provides an early retirement window for Tier 1 (educational) employees who retire between June 30
and September 1, 2002. Allows employees to add six years of age to reach normal retirement age or
early retirement at 77 points, and add three years of credited service for the purpose of calculating their
retirement benefit.
Status: Assigned to Hse. Education, Hse. RGO, Hse. APPROPS. DEAD ()
Admin Costs: First year cost of $3.6 million and $529,000 per year thereafter.
Actuarial Costs: Unfunded liability of $2.18 billion which reduces the Fund to only 96.5% funded, an
increase in contribution rate for all employers and employees of 2.83% each which
is a combined cost of $209.9 more in annual contributions for 17 years.
- 7 -
HB 2225 (ASRS; conforming changes; federal law)
By Reps. Brimhall and Graf
(STRIKE EVERYTHING AMENDMENT SUBJECT: abortion; fetal pain)
Conforms state law to the recent changes in federal law passed in the EGTERRA. It provides:
Increases the annual benefit limit for defined benefit plans to $160,000.
Increases the annual contribution limits under 415(c) to the lesser of 100% of compensation
or $40,000, indexed in $1,000 increments.
Increases the amount of compensation that may be taken into account under qualified
retirement plans to $200,000, indexed in $5,000 increments.
Repeals coordination requirements for 457 plans, so that 457 contributions are not limited by
401(k)/403(b) contributions.
After December 31, 2001, permits funds from IRAs, 403(b) and 457 plans to be transferred
on a pre-tax basis to purchase permissive service credit, or to repay prior cash outs in
governmental defined benefit plans.
Status: Assigned to Hse. RGO. Hse. RGO 03/22/02, S/E FAILED 4-4-0-2. DEAD ()
Admin Costs: $270,342 to include 5 FTEs. An amendment for the administrative costs has been
requested.
Actuarial Costs: Actuarial letter has been received stating no cost.
HB 2226 (ASRS; separate account; teachers)
By Reps. Brimhall and Graf
(STRIKE EVERYTHING AMENDMENT SUBJECT: credit reports; consumer copy)
Divides the ASRS employers into two groups. Tier 1 employers are each state university, each school
district, each charter school, each community college district and the AZ School for the Deaf and Blind.
Tier 2 employers are the state and all political subdivisions that are not included in the Tier 1 definition.
HB 2226 requires the ASRS to account Tier 1 employers separately, and provide them with an
actuarially determined contribution rate. Employees are allowed to transfer between employers.
Status: Assigned to Hse. RGO. Hse. RGO 3/19/02, S/E FAILED 5-4-0-1. DEAD ()
Admin Costs: First year cost of $4.1 million and $964,000 per year thereafter including 14 new FTEs.
Actuarial Costs: An increase in the contribution rate for all employers and employees in the Tier 2
group of 0.40%, a decrease in contribution rate for all employers and employees in
the Tier 1 group of 0.14%. Rate changes assume 0% return on investments for the
current year.
- 8 -
HB 2354 (deferred retirement option plans)
By Reps. Voss, Brotherton, and Sen. Richardson
Establishes a second voluntary DROP program for ASRS, EORP and CORP members that would start
July 1, 2003, and extend through July 1, 2008. Generally, this DROP would allow an ASRS member,
who has attained normal retirement age, to opt to extend employment up to five years, but not accrue
additional benefits in the defined benefit plan. Instead the members pension would be paid into a
separate account and invested. At the end of the period chosen by the employee, the benefit from the
separate account would be paid in a lump sum or as an annuity.
Status: Assigned to Hse. RGO and Hse. APPROPS. Passed Hse. RGO 2/05/02, DPA 8-
1-1-0. DEAD ()
Admin Costs: $793,846.
Actuarial Costs: Unfunded liability of $135.2 million, an increase in contribution rate for all
employers and employees of 0.28%.
HB 2379 (ASRS; retirees; graded multiplier increase)
By Rep. McClure
Amended in Hse. RGO to provide that members or their beneficiaries who were receiving benefits on
May 8, 2001, under the ASRS defined benefit program, a one-time permanent benefit increase based
on years of service from 2.38% to 9.52%, matching the graded multiplier passed in the 2001 session.
As amended, this bill is identical to HB 2211. As introduced this bill is identical to SB 1120.
Status: Assigned to Hse. RGO and Hse. APPROPS. Passed Hse. RGO 3/19/02, DPA 9-
0-0-1. DEAD ()
Admin Costs: $255,428 for mailing, equipment and professional outside services.
Actuarial Costs: Unfunded liability of $328.5 million, an increase in the contribution rate for all
employers and employees of 0.26% each which is a combined cost of $33 million
more in annual contributions for 17 years.
- 9 -
HB 2558 (retirees; health insurance; enhanced subsidy)
By Rep. Carruthers and 7 co-sponsors
As Passed the House: Extends the enhanced health insurance premium benefit for rural (nonservice)
areas from June 30, 2003 to June 30, 2004. Clarifies that the enhanced health insurance
premium benefit is in addition to the permanent health insurance premium benefit, applies the
incremental health insurance premium benefit percentage increase based on years of service between
5 to 10 years to the enhanced health insurance premium benefit, and clarifies the definition of nonservice
area.
Status: Passed Hse. Third Read 04/08/02, 49-0-11. Transmitted to the Senate 4/10/02.
Assigned Sen. FIN. Discharged Sen. FIN 04/18/02. Discharged Sen. Rules
04/18/02. Passed Sen. Caucus 05/06/02. Passed Sen. COW 05/08/02, DP.
Admin Costs: As Passed the House: $370,000.
Actuarial Costs: As Passed the House: Unfunded liability of $11.6 million, an increase in the
contribution rate for all employers and employees of 0.0113% each which is a
combined cost of $1.16 million more in annual contributions for 17 years.
TIER 2 (BILL NOT YET FILED)
This proposal may be introduced in an omnibus budget reconciliation bill. It would provide three years
of age to bring a state or local government employee to a normal retirement age or early retirement
under the point system (77 points), and add three years of credited service to the account of qualified
employees for the purpose of calculating the employees retirement benefit. The window would be
open from July 1, 2002 though September 30, 2002. This proposal is subject to change.
Status: Not yet introduced. The original supporters of this proposal appear to support it no
longer due to the high cost. ISSUE may be DEAD for this session.
Admin Costs:
Actuarial Costs: Unfunded liability of $654.2 million, an increase in the contribution rate for all
employers and employees of 1.76% each which is a combined cost of $1.18
billion.
- 10 -
OTHER SYSTEM BILLS
(Summaries as Introduced)
HB 2023 (PSPRS; deferred retirement date) DEAD ()
By Reps. Carpenter and OHalleran
A technical amendment to provide that a PSPRS member entering the DROP stops accruing benefits in the
PSPRS the day after he or she enters the DROP.
HB 2024 (fire fighters' pension; technical correction) DEAD ()
By Reps. Carpenter and OHalleran
A technical amendment to Title 9 to ensure that distribution of insurance premium taxes that are designated for
fire districts go to fire districts.
HB 2081 (PSPRS; prior service; redemption)Signed by Governor Hull 04/09/02, Ch. 13.
By Reps. Cannell, Carruthers, and Sen. Guenther and 2 co-sponsors
Allows PSPRS members to redeem prior service with an employer member of PSPRS by paying the amount of
the employer and employee contributions plus interest and any additional actuarial costs as determined by the
PSPRS actuary.
HB 2118 (PSPRS; CORP; EORP; retirement benefits)
By Rep. Blendu and 17 co-sponsors
Increases survivor benefits for the PSPRS, CORP, and the EORP. Makes the PSPRS DROP permanent and
modifies disability requirements within DROP and applies a 2% tax equity benefit for PSPRS and EORP
members.
HB 2288 (Retirement; PSPRS disability) DEAD ()
By Rep. Carruthers
The multiplier governing disability payments under the PSPRS is revised, apparently to increase payments.
HB 2372 (Retirement; PSPRS)
By Rep. Marsh
Allows PSPRS members to purchase credited service in the PSPRS based prior public service for which they
are not receiving a benefit. The member must pay the amount of employer and employee contributions plus
interest on the previous public service, if any, and an actuarial amount calculated by the PSPRS actuary for the
cost of the service to be purchased.
HB 2373 (county employee insurance; payment)Signed by Governor Hull 05/06/02, Ch. 143.
By Reps. Marsh and Avelar and 3 co-sponsors
Allows public funds to be expended to pay all or any part of the insurance premiums for former county
employees who are retired and receiving income from a retirement program of the State of Arizona and their
dependents.
HCR 2022 (Judge Retirement Age) (DEAD)
By Rep. Camarot
The 2002 general election ballot is to carry the question of amending the state constitution to raise the
mandatory judicial retirement age from 70 to 75.
- 11 -
LEGEND
AMEND C&P Constitutional and Proper as Amended by the House Rules Committee
ASRS Arizona State Retirement System
C&P Constitutional and Proper
CORP Corrections Officer Retirement Plan
COW Committee of the Whole
DP Do Pass
DPA Do Pass as Amended
DROP Deferred Retirement Option Plan
EAN Entry Age Normal
EORP Elected Officials Retirement Plan
FIN Finance Committee
FII Financial Institutions and Insurance Committee
IRS Internal Revenue Service
LTD Long Term Disability
PBI Permanent Benefit Increase
PIRA Public Institutions and Rural Affairs Committee
PFC Proper for Consideration
PFCA Proper for Consideration as Amended by the Senate Rules Committee
PUC Projected Unit Credit
PSPRS Public Safety Personnel Retirement System
RGO Retirement and Government Operations Committee
S/E Strike Everything Amendment
W&M Ways and Means Committee
The ASRS External Operations Division and the Legislative Board Committee usually meets each
Friday during the legislative session. The meetings are held in the 14th floor conference room of the
ASRS office located at 3300 North Central Avenue, Phoenix, AZ., and are open to the public. The
purpose of these meetings is to review legislative activity on retirement bills from the previous week,
and to review the scheduled bill activity in committees and on the floor for the upcoming week.
Committee members ask technical and background questions, and reviews the latest information
gathered from the Capitol and retirement groups from around the state. The meeting is
teleconferenced to the ASRS Tucson office located at 7660 East Broadway Boulevard, Tucson, AZ.
Please call any of the numbers below for time and details of Friday Legislative Board Committee
meetings.
If you have questions relating to legislation, please call Tom Finnerty at
(602) 240-2027 in metro Phoenix, (520) 239-3100 extension 2027 in
metro Tucson, or (800) 621-3778 extension 2027 outside metro Phoenix
and Tucson.
The weekly legislative report is available on-line at the ASRS Web site:
www.asrs.state.az.us
Quick Reference
ASRS Related Retirement Legislation
(For the Period Ending Friday, May 10, 2002)
BILLS BILL STATUS ASRS ADMIN. COST ACTUARIAL COST
SENATE BILLS
SB 1004 ASRS; spousal consent
by Smith & Cirillo
As Passed the Senate: Requires a married ASRS member to
take a joint and survivor option unless the members spouse
consents to the member choosing a different option. The 50%
joint and survivor option is the default option if the married
member fails to make a choice. The straight life option is the
default option for an unmarried member unless they choose
otherwise. Appropriates $125,558 from the ASRS admin.
account, and authorizes 1.5 FTEs. Effective July 1, 2003.
Amended in Hse. RGO to allow retirees who have elected a
life certain option to pop up.
Passed Senate 28-0-2.
Assigned: Hse. RGO.
Status: Passed Hse.
RGO DPA 7-0-0-3.
Assigned Hse. APPROP
04/18/02. Withdrawn
from Hse. APPROP.
Passed Hse. Rules C&P
11-0. Passed Hse.
Caucus. Hse. RGO
Amendment adopted.
Failed Hse. COW DPA
9-45-6.
As Passed the Senate:
$125,558 for printing
new forms, computer
programming costs and
1.5 new FTEs.
As Passed the Senate: None expected.
Hse. RGO Amendment: Unfunded
liability of $32.1 million, an increase in
the contribution rate for all employers
and employees of 0.03% each, which is
a combined cost of $469,000 more in
annual contributions for 17 years.
SB 1095 ASRS; federal conforming changes
by Cirillo
As Passed the Senate: Conforms the ASRS statutes to recent
changes in federal laws and repeals the sunset of the return to
work program. Appropriates $270,342 from the ASRS admin.
account, and authorizes 5 FTEs.
Passed Senate 28-0-2.
Passed House 57-0-3.
Status: Transmitted to
the Senate 05/02/02.
Senate Concur. Passed
Sen. Final Read 27-0-3.
Transmitted to the
Governor.
As Passed the Senate:
$270,342 to include 5
FTEs.
As Passed the Senate: Actuarial letter
has been received stating no cost.
SB 1120 - ASRS; retirees; graded multiplier increase
by Hamilton & Gerard
As Passed the Senate: Provides a one-time benefit increase
that is based on years of service, to members retired on or
before May 8, 2001.
Amended in Hse. RGO to appropriate $255,000 to the ASRS
for the implementation of this act.
Passed Senate 17-11-2.
Assigned: Hse. RGO.
Hse. APPROP.
Status: Passed Hse.
RGO DPA 8-0-0-2.
Awaiting Hse. APPROP.
DEAD()
As Passed the Senate:
$255,428 for mailing,
equipment and
professional outside
services.
As Passed the Senate: Unfunded
liability of $328.5 million, an increase in
the contribution rate for all employers
and employees of 0.26% each which is a
combined cost of $33 million more in
annual contributions for 17 years.
SB 1239 retirees; health insurance; enhanced
subsidy
by Arzberger, Rios, Brown & Guenther and 4
As Passed the Senate: Extends the enhanced health
insurance premium benefit to ASRS retirees and LTD recipients
who live outside of Arizona. Clarifies the definition of non
service areas. Retroactively effective to June 30, 2001.
Amended in Hse. RGO to be the same as HB 2558, including
extending the program from 2003 to 2004.
Passed Senate 27-0-3.
Assigned: Hse. RGO.
Hse. APPROP.
Status: Passed Hse.
RGO DPA 7-0-0-3.
Passed Hse. APPROP
DP 8-2-0-6. Awaiting
Hse. Rules.
As Passed the Senate:
$370,000.
As Passed the Senate: Unfunded
liability of $1.58 million, a hypothetical
increase in contribution rate for all
employers and employees of 0.0013%
each which is a combined cost of
$160,848 more in annual contributions
for 17 years.
As Amended in Hse. RGO: Unfunded
liability for $11.6 million, an increase in
contribution rate for all employers and
13
BILLS BILL STATUS ASRS ADMIN. COST ACTUARIAL COST
SENATE BILLS
employees for 0.0113% each which is a
combined cost of $1.16 million more in
annual contributions for 17 years.
SB 1241 retirees; health insurance; subsidies
by Arzberger, Guenther & Verkamp and 9
Allows the subsidy to be paid to members with 10 or more
years of service, clarifies the definition on non-service area,
clarifies the subsidy is in addition to the regular amount, and
allows members residing in a different state to receive the
subsidy.
Assigned: Sen. FIN.
Status: Awaiting Sen.
FIN. DEAD ()
$370,260. Unfunded liability of $1.58 million, a
hypothetical increase in contribution rate
for all employers and employees of
0.0013% each which is a combined cost
of $160,848 more in annual contributions
for 17 years.
SB 1328 transportation peace officers; retirement
by Mitchell and 19
Allows ADOT peace officers to contribute to PSPRS.
Assigned: Sen. FIN
Status: Awaiting Sen.
FIN. DEAD ()
None expected. None expected.
14
BILLS BILL STATUS ASRS ADMIN. COST ACTUARIAL COST
HOUSE BILLS
HB 2211 ASRS; retirees; graded multiplier increase
by Brimhall & Graf
Amended in Committee to provide members or their
beneficiaries who were receiving benefits on May 8, 2001, a
one-time benefit increase that is based on years of service.
Assigned: Hse. RGO.
Hse. APPROP.
Status: Passed Hse.
RGO DPA 6-0-0-4.
Awaiting Hse.
APPROP. DEAD ()
$255,428 for mailing,
equipment and
professional outside
services.
Unfunded liability of $328.5 million, an
increase in the contribution rate for all
employers and employees of 0.26%
each which is a combined cost of $33
million more in annual contributions for
17 years.
HB 2215 ASRS; actuarial computation method
Changes the actuarial computation method from EAN to PUC.
Reduces the amortization period from 30 years to 20 years.
by Brimhall & Graf
Amended in Committee to provide that commencing July 1,
2007, employer contributions are to be determined by EAN.
Assigned: Hse. RGO.
Hse. APPROP.
Status: Passed Hse.
RGO DPA 6-1-2-1.
Awaiting Hse.
APPROP. DEAD ()
None expected. Gradually reduces the surplus over a
ten-year period resulting in less than
100% funded by 2011. Gradually
increases the contribution rate for
employers and employees, attaining a
total increase of 2.08% each by
7/1/2011.
Note: The actuary estimates that the
fund could maintain a fully funded status
(100.4% funded) if the transition period
was shortened to seven years.
HB 2219 ASRS; retirement window; teachers
Provides an early retirement window for Tier 1 employees
between June 30 and September 1, 2002. May add 6 years to
age, and 3 years to service to attain normal retirement.
Conditionally enacted upon passage of HB2226.
by Brimhall & Graf
Assigned: Hse. ED.
Hse. RGO. Hse.
APPROP.
Status: Awaiting Hse.
ED. DEAD ()
First year cost of $3.6
million and $529,000 per
year thereafter.
Unfunded liability of $2.18 billion which
reduces the Fund to only 96.5% funded,
an increase in contribution rate for all
employers and employees of 2.83%
each which is a combined cost of $209.9
more in annual contributions for 17
years.
HB 2225 ASRS; conforming changes; federal law
Conforms the ASRS statutes to recent changes in federal laws.
by Brimhall & Graf
(S/E AMENDMENT: abortion; fetal pain)
Assigned: Hse. RGO.
Status: S/E Failed Hse.
RGO 4-4-0-2.
DEAD ()
$270,342 to include 5
FTEs. An amendment
for the administrative
costs has been
requested.
Actuarial letter has been received stating
no cost.
HB 2226 ASRS; separate account; teachers
Divides the ASRS employers into two groups. Requires the
ASRS to account Tier 1 employers separately, and provide them
with an actuarially determined contribution rate. Allows
employees to transfer between employers.
by Brimhall & Graf
(S/E AMENDMENT: credit reports; consumer copy)
Assigned: Hse. RGO.
Status: S/E Failed Hse.
RGO 5-4-0-1. DEAD
()
First year cost of $4.1
million and $964,000 per
year thereafter including
14 new FTEs.
An increase in the contribution rate for all
employers and employees in the Tier 2
group of 0.25% each, a decrease in
contribution rate for all employers and
employees in the Tier 1 group of 0.17%
each.
HB 2354 deferred retirement option plans
Establishes a voluntary DROP for active members between July
1, 2003 and June 30, 2008.
by Voss & Brotherton, Richardson
Assigned: Hse. RGO.
Hse. APPROP.
Status: Hse. RGO DPA
8-1-0-1. Awaiting Hse.
APPROP.
$793,846. Unfunded liability of $135.2 million, an
increase in the contribution rate for all
employers and employees of 0.28%.
15
BILLS BILL STATUS ASRS ADMIN. COST ACTUARIAL COST
HOUSE BILLS
DEAD ()
HB 2379 ASRS; Retirees; graded multiplier
increase, aka HB 2211 as amended, SB 1120 as
introduced
Amended in Committee to provide that members or their
beneficiaries who were receiving benefits on May 8, 2001, a
one-time benefit increase that is based on years of service.
by McClure & Binder and 11
Assigned: Hse. RGO.
Hse. APPROP.
Status: Passed Hse.
RGO DPA 9-0-0-1.
Awaiting Hse.
APPROP. DEAD ()
$255,428 for mailing,
equipment and
professional outside
services.
Unfunded liability of $328.5 million, an
increase in the contribution rate for all
employers and employees of 0.26%
each which is a combined cost of $33
million more in annual contributions for
17 years.
HB 2558 retirees; health insurance; enhanced
subsidy
by Carruthers and 7
As Passed the House: Extends the rural health insurance
subsidy passed in 2001, until June 30, 2004. Clarifies that the
enhanced health insurance premium benefit is in addition to the
permanent health insurance premium benefit, applies the
incremental health insurance premium benefit percentage
increase based on years of service between 5 to 10 years to the
enhanced health insurance premium benefit, and clarifies the
definition of non-service area.
Passed House 49-0-11.
Assigned: Sen. FIN.
Status: Discharged
Sen. FIN. Discharged
Sen. Rules. Passed
Sen. Caucus. Passed
Sen. COW DP.
As Passed the House:
$370,000.
As Passed the House: Unfunded
liability of $11.6 million, an increase in
the contribution rate for all employers
and employees of 0.0113% each which
is a combined cost of $1.16 million more
in annual contributions for 17 years.
TIER 2 ASRS; retirement window; local government
and state employees. NO BILL YET FILED.
Proposal to create an early retirement window for all
employees in Tier 2 of HB 2226 and subtract salary
amounts of retiring state employees from the state
agencys budget.
The original supporters
of this proposal appear
to no longer support it
due to the high cost.
ISSUE may be DEAD
for this session.
Unfunded liability of $654.2 million, an
increase in the contribution rate for all
employers and employees of 1.76%
each which is a combined cost of $1.18
billion over 17 years.